Oil Prices Spike Amidst Storm Threats

After hurricane Katrina spelling doom for oil consumers all over the globe Crude-oil futures yesterday surged more than $4 -- the biggest one-day price jump ever -- amid worries that Tropical Storm Rita strengthening off the Bahamas could hit US oil facilities in the Gulf of Mexico this week.

Overnight reports from the US note evacuations have started from the Florida Keys area as Hurricane Rita bears down on that area in the same way that Katrina seemed to target New Orleans. Oil producers have airlifted workers from off-shore oil rigs, many of which were barely back in production.

The back breaking surge in crude, heating oil, and gasoline futures came as 137th OPEC ministries summit commence to discuss how to relieve price pressures in the oil market and expressed concern that Rita would bear down on the hurricane-ravaged Gulf Coast.

"It's very worrisome," said John Kilduff, senior vice-president of energy risk management at Fimat USA.

"Many oil companies have already started evacuating personnel. There's no telling how high prices could go."

"This one looks to be heading for Galveston," the second major oil port in the gulf, said Mark Waggoner, president of Excel Futures in Huntingdon, California. "A direct hit there would be very bad."

In Vienna the Organisation of Petroleum Exporting Countries was expected to announce overnight an agreement to offer an extra 2 million barrels a day to world markets to help stabilise oil markets, the group's president said yesterday.

Benchmark light, sweet crude for October delivery rose $4.39, or 7 percent, on the New York Mercantile Exchange.

Brent crude for October rose $3.80 to $65.61 on London's International Petroleum Exchange.

As hurricane Rita moves closer to hurricane strength uncertainties over crude prices are here to stay.